The new retail formula for success

Real Estate | 31 Jan |

Contrary to what we hear almost daily in the media, retailing is undergoing an exciting transformation unlike the industry has experienced in several decades.  While the pundits may have forecast that the internet was going to bring about the demise of traditional retail storefronts, the reality is that e-commerce is totally revolutionizing the way retailers and restaurants deliver products and services to their customers. The internet is actually expanding the choices and convenience of the shopping experience like never before.  

Dave Cheatham is president of Velocity Retail Group.

Today more than ever before the customer wants choices as to how they receive their purchases.  They want to decide how they want it, where they want it, and when they want it.  Traditional shoppers may prefer coming to a store, seeing the product, interacting with sales personnel and making their purchase while there.  Some customers want the convenience of receiving their orders on their doorstep, porch or apartment lobby. Others want to select their order online, have the retailer pick it off their shelves and have it ready and waiting at the store.  Others choose the drive through to get their order, or have it brought curbside once they get to the store.  

The result is most retailers are faced with the necessity of retooling their platforms to provide multiple options to achieve the customers’ expectations.  In order to connect with today’s shoppers, retailers and restaurants are learning to compete in four important arenas which are fast becoming the new formula for doing business in the internet economy.  

The New Retail Formula for Success

1. Traditional shopping in a store

2. Delivery to the front door (e-commerce)

3. Buy online and pick up in the store (BOPIS)

4. Drive-thru or curbside pick up

By implementing this four part formula, retailers and restaurants are rapidly advancing this  new model.   Restaurants are also evolving as they partner with outside delivery services such as GrubHub, Postmates, Uber Eats or Door Dash to name a few.  These partners allow the restaurants to serve up convenience along with a great meal.  Grocery stores have added drive-thru and curbside pick up in addition to delivery.   For retailers the expansion of their delivery platform will continue to be important to stay competitive. For many, having the resources to be able to do it all themselves might pose a challenge, but partnering with logistic solutions that are evolving such as Instacart, or Darkstore will help expand their platforms and provide the capabilities that customers demand.

This evolution will also have a profound impact on future store prototypes, architectural design of shopping centers and even shift zoning for cities.  We are already seeing retailers who were once content to be in-line in a shopping center relocating those stores in favor of a free-standing store that can accommodate a drive-thru.  Panera, Dunkin, and Chipotle are all examples of this trend.  Municipalities that want to attract new and exciting retail concepts will need to adjust their age-old zoning laws that restrict the amount of drive-thrus in certain areas.  

For retailers to compete and stay relevant to the customer they must be able to redesign their organizations to be able to deliver in all four disciplines.  It is no longer just about brick-and-mortar or online.  It is about excelling with the New Retail Formula.  Retailers that are continually improving their omnichannel abilities will be reaping the rewards for years to come.

 

Dave Cheatham is president of Velocity Retail Group. He is an accomplished authority on retail real estate in the disciplines of brokerage, project leasing, development, consulting and advisory services.

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